RBI Scam Compensation Framework:
The Reserve Bank of India (RBI) has issued final amendments to its Limiting Customer Liability in Digital Transactions framework.
- Effective January 1, 2027, the one-year pilot expands protection against social engineering scams and introduces monetary compensation for victims of small-value digital fraud.
- The framework is a regulatory financial safety net designed to protect bank customers from digital payment frauds. It upgrades the RBI’s 2017 circular, which only protected against unauthorised hacking hacks.
- The modern mechanism introduces Fraudulent Electronic Banking Transactions (EBTs) as a legal concept, making individuals eligible for reimbursement even if they accidentally shared credentials due to deception or coercion.
- Regulator: The Reserve Bank of India (RBI).
- Aim:
- To provide economic relief to victims of modern digital scams, including digital arrests, phishing, and fraudulently stolen One-Time Passcodes (OTPs).
- To shift the legal burden of proof onto the bank, forcing financial institutions to actively prove customer negligence rather than automatically denying fraud claims.
Features and Rules of the Policy:
- The Payout Formula: Individual victims (including sole proprietors) suffering scam losses up to ₹50,000 can claim 85% of their net loss, capped at a maximum of ₹25,000.
- The Breakpoint: For losses below ₹29,412, victims get exactly 85% of the amount. For losses between ₹29,412 and ₹50,000, the payout is capped at a flat ₹25,000.
- The Cap: Scams exceeding ₹50,000 are completely excluded from this specific reimbursement track.
- Frequency: This financial remedy can be claimed only once in a customer’s lifetime. For joint accounts, only one holder may file the claim.
